The regional council's proposed $230 million dam has been identified as the single biggest economic development opportunity for Hawke's Bay.
And while improving the councils' performance is considered critical, it is not a "silver bullet" for regional prosperity, a report says.
The first stage of the $100,000 McGredy, Winder & Co Prosperity Study was released yesterday, a report commissioned by the five Hawke's Bay councils but funded entirely by the Hawke's Bay Regional Council.
The first stage identified the issues and the ways for improving the prosperity of Hawke's Bay. It canvassed economic, social, political and environmental areas.
It stated Hawke's Bay has large areas of land suited to intensive agriculture or horticulture that is not being utilised, in part because of the lack of security in the supply of irrigation water.
The region's lack of water security is a key issue the regional council hopes the Ruataniwha Water Storage Project, a $230 million dam in Central Hawke's Bay, will address.
The fiercely debated issue of amalgamation is also addressed, although more detailed analysis on it is expected in Part 2 of the report, due for completion in November.
Of critical importance was the ability of Central Hawke's Bay and Wairoa district councils to deal with complex and wide ranging issues their communities face, and their ability to contribute to the large initiatives needed to boost the region.
"Leadership within the Hawkes Bay is currently fragmented, and debate over local government amalgamation seems to have got in the way of effective collaboration," the report said.
Improving the performance of local government was considered critical because the councils' resources were required to enact change, but this was "by no means a silver bullet" and "savings from reform will be modest compared to the potential benefits of other initiatives".
It also noted an amalgamation process could jeopardise the delivery of the dam project, the benefits of which significantly eclipsed the benefits of amalgamation.